UNION BUDGET 2024-25 - SNAPSHOT

Direct Tax Amendments in Finance Bill, 2024

Applicable for FY 2024-25 unless mentioned otherwise
K G Acharya & Co., Chartered Accountants

Comprehensive review of Income-tax Act, 1961

shall be undertaken for making it concise, lucid, easy to read & understand
with an aim of reducing disputes & litigation, thereby providing tax certainty to tax payers.
It will also bring down the demand embroiled in litigation.
Proposed to be completed in 6 months !!!

I. Rate of Tax & Individuals

1. No change in tax rates in case of optional old tax regime.

2. Changes made in Default new tax regime u/s 115BAC (Applicable to Individual/HUF/AOP/BOI/AJP)

i. Standard deduction increased to Rs. 75,000 from Rs. 50,000.

With higher standard deduction & rebate u/s 87A - No tax for individuals with salary upto Rs.7.75 L

ii. Deduction towards Employer’s contribution to NPS / APY u/s 80CCD(2) shall now be allowed upto
14% of salary for all employees. (Pre 14% to CG Employees & 10% to Non Govt Employees)
Similarly, deduction upto 14% (10% earlier) of salary shall be allowed as deduction to employer u/s
36(1)(iva).

iii. Deduction on family pension increased to Rs. 25,000 from Rs. 15,000 (or 1/3rd of such income WIL –
Taxable under IFOS).

Refer Annexure-1 for the applicable tax rates.

II. Business & Corporates

3. Any income from letting out of residential house or a part of the house by the owner shall not be
chargeable under “Profits & gains of business or profession” & shall be chargeable under “Income from
house property”. (Expln. to S 28)
This is regardless of whether the property is held as part of a business.
Developers renting unsold flats can no longer set off expenses from business against such rental income.
Decisions nullified Rayala Corporation Pvt. Ltd. Vs. ACIT (2016) 386 ITR 500 (SC)
Chennai Properties and Investments Ltd. Vs. CIT (2015) 373 ITR 673 (SC)

4. Settlement amounts paid to settle contraventions under such law as may be notified by Central Govt shall
not be allowed as an expenses u/s 37(1)
Expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall include
any expenditure incurred by an assessee to settle proceedings.

5. Increase in max allowable limit of remuneration to working partners of a firm which is allowed as
deduction u/s 40(b)(v).
Pre Post
Rs.1.5 L or 90% of book profit Rs. 3 L or 90% of book profit
On first Rs. 3L of book profit On first Rs. 6L of book profit
WIH WIH
On the balance 60% On the balance @ 60%

6. Angel tax provisions u/s 56(2)(viib) abolished.

S 56(2)(viib) - Shares issued at premium > its FMV by a closely held Co. to be taxable under other sources now removed.
For AY 24-25- Even premium received from Non-Residents covered. Very next year entire section deleted!!

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7. Taxation of buy back of shares - WEF 1/10/24

Pre- Company to pay tax on distributed profits (buy back price less cost of share) @ 23.296% & receipts were
exempt in the hands of shareholder.
Post- Amount received on buyback of shares to be taxed in the hands of the shareholders as dividends
under IOS, at applicable slab tax rates (without any deduction) u/s 2(22)(f).
Original cost of shares shall be treated as capital loss to be adjusted against other capital gains, either in
same FY or set off over subsequent 8 years.

III. Capital Gains - WEF 23rd July 2024

8. Rationalisation & Simplification of CG calculation!!!

i. Period of Holding (POH) for determining cut-off of long term & Short-term capital gains simplified-
• For all listed securities, POH is 12 months &
• For all other assets, POH shall be 24 months
(Earlier 36 Months category removed)

ii. Indexation benefit available under 2nd Proviso to S 48(2) removed for calculation of any LTCG.
However, option to substitute original cost with FMV as on 01/04/2001 for properties purchased before
01/04/2001 continued u/s 55(2)(b). This is what is told by the FM as Indexation available for property upto 2001!!

iii. Tax rate for LTCG @ 12.5% iro all categories of assets.
Pre- 10% for STT paid listed equity shares, units of equity-oriented fund & business trust u/s 112A & for other
assets it was 20% with indexation u/s 112.

iv. Exemption on LTCG gains upto 1.25 Lakh (Pre 1 Lakh) u/s 112A on sale of STT paid equity shares,
units of equity-oriented fund & business trust.

Further, following grandfathering provision introduced in Finance Act 2018 U/s.55 will continue -
Cost of acquisition wrt STT paid equity shares, units of equity-oriented fund & business trust acquired
before 1st Feb 2018, shall be deemed to be the higher of –
a) Actual cost of acquisition of such asset
b) And lower of
i. FMV of such asset as on 31st Jan 2018 and
ii. Consideration received or accruing.

v. Tax on STCG u/s 111A, increased to 20% from 15% on STT paid equity shares, units of equity oriented
mutual fund & unit of a business trust.

vi. To bring parity between residents & non-residents, corresponding amendments to S 115AD, 115AB,
115AC, 115ACA & 115E are made to align tax rates iro LTCG u/s 112A /112 & rates of STCG u/s 111A.

Refer Annexure-2 for detailed POH of each class of asset and tax rates.

9. Amendment in S 47(iii) to provide that transfer of a capital asset, under a gift or will or an irrevocable
trust, only by an individual or HUF shall not be treated as a transfer for the purposes of Capital Gains
u/s 45.

Gifts given by other than individuals & HUF say a company / firm after 1st April 2024 will be treated as transfer of
asset and will attract capital gains tax in the hands of donor.

10. STT increased to 0.1% on option premiums & 0.02% on futures trades. (Pre 0.0625% & 0.0125% respectively)

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IV TDS – TCS Rationalized

11. TDS rates reduced
Section Pre Post WEF
194D Payment of insurance commission 01.04.2025
194DA Payment in respect of Life Insurance Policy
194G Commission etc. on sale of lottery tickets
194H Payment of commission or brokerage 5% 2%
194IB Payment of rent > 50k p.m by certain individuals / HUF 01.10.2024
194M Payment of certain sums > 50L by certain individuals or HUF
(other than those required to deduct tax U/s. 194C,194H or 194J)
194O Payment by Ecom Operators to Ecom Participants 1% 0.1%
194F Payments on a/c of repurchase of units by MF or UTI Omitted

12. TDS @ 10% introduced on payments such as salary, remuneration, commission, bonus & interest to
partner for amounts > Rs. 20,000/- in a year. 194T - WEF 01/04/2025.

13. TCS u/s 206C(1F) extended to notified luxury goods (Pre: Motor Vehicle) > Rs. 10 Lakhs. WEF 01/01/2025.

14. Credit of all tax deducted or collected to be considered while computing TDS on salary u/s 192(1).
S.192(2B) - WEF 1/10/24

15. Credit of TCS of minor can be claimed by that parent in whose TI the income of minor is clubbed
U/s.64(1A). WEF 1/01/2025.

16. If value of Immovable property being purchased > 50L & there are multiple sellers, TDS u/s 194IA shall
apply, even if each seller is receiving < Rs. 50L. WEF 1/10/24

17. Amendment in clause (iv) of the Explanation of S. 194C which defines "work” to explicitly exclude cases
that should fall u/s 194J WEF 1/10/24
Payments falling u/s 194J should not be considered as "work" for S 194C TDS purposes.

18. Lower rate TDS /TCS deduction certificates can be made for S 194Q & S 206C(1H) WEF 1/10/24
194Q – TDS to be deducted by buyer for purchase of any goods > Rs 50 Lakhs @ 0.1%
206C(1H) - TCS to be Collected by Seller for sale of any goods > Rs 50 Lakhs @ 0.1%

19. Rate of interest u/s. 206C(7) for non-payment of TCS increased from 1% pm to 1.50 % pm to bring it in
line with interest on delayed payment of TDS WEF 01/04/2025

20. Revised E-TDS & E-TCS can be filed only within 6 years from the end of the respective FY. WEF 01/04/2025
Pre: No time limit for filing such correction statement iro TDS/TCS Statements.

21. Penalty for filing belated E-TDS/E-TCS returns applicable, if filed beyond 1 month (Pre 1 year) from due
date, provided TDS along with fees & interest is remitted. WEF 01/04/2025.
While earlier due date to file a belated return was 1 year from end of AY, the time limit presently is 31st Dec of the same AY. Deductees / collectees
face great inconvenience if TDS/TCS statements by deductors/ collectors are not furnished in time leading to mismatch in TDS/TCS during processing
of ITR and raising of infructuous demands. To ensure better compliance the time limit is reduced for filing belated ETDS/ETCS Return.

22. Relief from risk of rigours imprisonment (of 3 M to 7 Y & with Fine) to tax deductors. WEF 1/10/24
Prosecution u/s 276B not to apply if TDS iro the quarter is deposited within due date of filing E-
TDS returns of such quarter.

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V Assessment & Appeals

23. Direct Tax Vivad se Vishwas Scheme, 2024 shall come into force from the date to be notified by Central
Govt. to provide a settlement mechanism for disputed issues, thereby reducing litigation @ minimum cost:

Nature of If scheme is availed

Appeal filing period
tax arrears Before 31st Dec 2024 After 1st Jan 2025
Tax, 31st Jan 2020 to 22nd July 2024 Disputed tax Disputed tax +10% of disputed tax
interest &
on or before 31st Jan 2020 Disputed tax+10% of disputed tax Disputed tax+20% of disputed tax
penalty
Interest or 31st Jan 2020 to 22nd July 2024 25% of disputed interest or penalty 30% of disputed interest or penalty
penalty on or before 31st Jan 2020 30% of disputed interest or penalty 35% of disputed interest or penalty
Settlement amounts payable to be reduced to 50% in the following cases
1. Where appeal/writ/SLP is filed by tax authorities
2. Where the issue is covered by a favourable ITAT/HC decision in taxpayers’ own case

24. Reduction in no. of years for which re-assessment can be conducted - WEF 1/9/2024

Particulars Pre Post

For issue of SCN u/s 148A
- if income escaped < INR 50L -- 3 years from end of AY
- if income escaped > INR 50L -- 5 years from end of AY

For issue of Notice u/s 148

- if income escaped < INR 50L 3 years from end of AY 3 years & 3m from end of AY
- if income escaped > INR 50L 10 years from end of AY 5 years & 3m from end of AY

SCN shall be accompanied by the information which suggests income has escaped assessment.

25. Amendments is S 153 which deals with time limit for completing assessments, reassessments, & re
computations under various sections, including S. 143, 144, 147, 153A, & 153C as under

New Sub-section (1B)

• For returns filed due to an order u/s 119(2)(b) (condonation cases), assessment must be completed
within 12M from end of FY in which return is filed.
Amendment to Sub-section (3):
• Fresh assessments following an order u/s 250, 254, 263, or 264 must be completed within 12M
from end of FY in which relevant order is received or passed.

26. Best judgement orders u/s 144 may be set aside by CIT(A) & refer the case back to AO for making fresh
assessment. WEF 1/10/24.

Pre: CIT(A) could seek a report from AO after making further inquiry & dispose of the appeal accordingly.

27. Amendment in S 92CA enables the TPO to determine ALP for specified domestic transactions not referred
by the AO or not reported in the audit report u/s 92E.

Previously, this provision applied only to international transactions, but now it includes SDTs as well.

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28. Re-introduction of block assessment provisions (Back to 2021!!) for searches u/s 132 & requisitions
u/s 132A conducted after 1st September 2024. – Chapter XIV-B amended.

Pre – Search assessments were covered under re-assessment provisions u/s 148, wherein re-assessments were
conducted for 10 years resulting into search assessment procedures lasting up to 10 years.

Post – (In order to have early finalization of search assessments, coordinated investigation & reduction in
multiplicity of proceedings)

i. Search cases to be assessed based on block of 6 AYs preceding the year in which search is conducted including
the year in which search was conducted. There will be one consolidated assessment for the block period –
Regular assessment for the block period shall abate.

ii. Tax shall be charged @ 60% + SC for block period (No interest u/s 234 A/B/C or penalty u/s 270 A). Penalty @
50% is applicable if assessee does not offer undisclosed income in the ITR furnished pursuant to search.

iii. Time-limit for completion of block assessment shall be 12M from the end of the month in which the last of the
authorisations for search u/s 132, or requisition u/s 132A, was made.

iv. Searches/Requisitions conducted from 1/04/2021 to 31/08/2024 – Provisions of S. 147 to 151 shall apply as
they stood immediately before the commencement of the Finance (No. 2) Act, 2024

29. S. 245 – Withholding of refund in case of a pending assessment/reassessment - WEF 1/10/2024

As per S.245(2), if AO believes that the granting of refund would be prejudicial to revenue in case where there is
an ongoing assessment/reassessment, then AO can withhold the refund.

Pre – Refund to be withheld upto date of assessment/reassessment.

Post– Refund to be withheld up to 60 days from date of assessment/reassessment is made.

Reason for amendment – The period of withholding the refund was found to be inadequate, as any tax demand becomes due only after 30 days
from the close of the assessment.

30. Appeal to ITAT S. 253 - WEF 1/10/2024

a. Order u/s S. 158BFA (order levying interest & penalty in search cases) – added to list of appealable orders
before ITAT.
b. Time limit for filing appeal before ITAT streamlined–

Pre – within 60 days of order communicated to assessee/PCIT/CIT.

Post – within 2m from the end of month in which order communicated to assessee/PCIT/CIT.

31. Monetary limits of the tax effect to file departmental appeals are revised as under:
Appellate Forum Pre Post GST
(Budget speech) (Cir. No 207/01 /2024
dated 26.06.24)
Income Tax Appellate Tribunal 50 L 60L 20L
High Court 1 Cr. 2 Cr. 1 Cr.
Supreme Court 2 Cr. 5 Cr. 2 Cr.

32. Liabilities arising under Black Money (Undisclosed Foreign Income & Assets) & Imposition of Tax Act, 2015
shall also be included in S 230(1A) for the purpose of obtaining a tax clearance certificate (In addition to Income-
tax Act, or Wealth-tax Act or Gift-tax Act, or Expenditure-tax Act)

S 230(1A) requires a person domiciled in India to obtain a tax clearance certificate before leaving the
country, confirming no tax liabilities or satisfactory arrangements for tax payments under various laws.

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33. Prohibition of Benami Property Transactions Act, 1988, introduces S 55A, allowing the Initiating Officer to
grant immunity from penalties to benamidars or other persons who provide full & truthful disclosures
about benami transactions. WEF 1/10/24.

Penalty of rigorous imprisonment for Min. 1 year to Max. 7 years along with fine extending to 25% of FMV
of benami property.

VI Charitable Trusts

34. Gradual phasing out of provisions in S 10(23C) by combining them with S 11 to S 13 as under
i. Applications for final/provisional approval u/s 10(23C) (iv), (v), (vi) or (via) shall not be considered after 1st
Oct 2024
ii. Applications filed under above sub-clauses before 1st Oct 2024 & which are pending would be processed u/s
10(23C) itself
iii. Approved trusts would continue to get benefit of exemption, U/s 10(23C) (iv), (v), (vi) or (via) until the
validity of the said approval.
iv. They would be eligible to apply for registration, subsequently, u/s 11 to 13 only.

35. Condonation of delay in filing application for registration by trusts or institutions WEF 1st Oct 2024
PCIT/ CIT may condone delay in filing appln. for regn. if he considers that there is reasonable cause for it.

At times T/I are unable to file application within specified timelines and in such cases, it may become
liable to tax on accreted income vide provisions of Chapter XII-EB or a situation of permanent exit of T/I
from exemption regime may also arise. This amendment would help in such cases.

36. Increase in timelines for disposing of application for registration by PCIT/CIT - WEF 1st Oct 2024
Pre – within 6 months from the end of the month in which application was received
Post - 6 months from the end of the quarter in which the application was received

37. A new S 12AC introduced, where in the event of a merger of trusts with another approved or registered
entity, the provisions regarding accreted income & Exit tax shall not apply if
i. The other trust has same or similar objects
ii. The other trust is regd. u/s 12AA, 12AB or 10(23C) (iv) (v) (vi) (via) &
iii. The merger fulfils such conditions as may be provided by rules.

VII International Taxation

38. Corporate tax on foreign companies reduced to 35% from 40%

39. Withdrawal of equalization levy of 2% on the amount of consideration received/ receivable by a non-
resident e-commerce operator who owns, operates or manages digital or electronic facility or platform
for online sale of goods or online provision of services or both. WEF 1st Aug 2024

40. Non-disclosure of a foreign asset (except immovable property) upto Rs. 20L does not attract penalty of Rs.
10L u/s 42 & 43 of Black Money Act. WEF 1st Oct 2024

Pre - Non-disclosure of Bank accounts with bal < 5L at any time during the year shall not attract penalty.

41. TDS withheld outside India must be included in the calculation of an assessee's total income – Grossing up
of foreign TDS. (S. 198 Amendment)
Prevents underreporting of income addressing the issue of net income being offered for tax while still
claiming credit for foreign taxes withheld.

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Annexure 1- Tax Rates

1. For Individuals / HUF – Optional tax Regime
SN Total Income Tax Rate Tax Rate
(incl SC & Cess)
1. Upto Rs. 2.5 Lakhs (Sr Citizen upto 3L & Super Sr Citizen upto 5L) Nil Nil
2. Rs. 2.5 Lakhs to Rs. 5 Lakhs 5% 5.2%
3. Rs. 5 Lakhs to Rs. 10 Lakhs 20% 20.8%
4. Rs. 10 Lakhs to 50 Lakhs 31.2%
5. Rs. 50 Lakhs to 1 Cr 34.32%
6. 1Cr-2Cr 30% 35.88%
7. 2Cr-5Cr 39.00%
8. >5Cr-10Cr 42.74%

2. For Individuals / HUF / AOP / BOI / AJP – Default Regime U/s.115BAC by forgoing certain Exemptions &
Allowances as mentioned below.

SN Total Income PRE Tax Rate Tax Rate

(incl SC & Cess)
1. Upto Rs. 3 Lakhs  Nil Nil
2. Rs. 3 Lakhs to Rs. 7 Lakhs 3-6 5% 5.2%
3. Rs. 7 Lakhs to Rs. 10 Lakhs 6-9 10% 10.4%
4. Rs. 10 Lakhs to Rs. 12 Lakhs 9-12 15% 15.6%
5. Rs. 12 Lakhs to Rs. 15 Lakhs  20% 20.8%
6. Rs. 15 Lakhs to 50 Lakhs  31.2%
7. Rs. 50 Lakhs to 1 Cr  34.32%
30%
8. 1Cr-2Cr  35.88%
9. >2Cr  39.00%

List of Exemptions & Allowances

Assesses opting for tax U/s. 115BAC shall not be entitled to following exemptions/ deductions:
Salaried assessees
i. Leave travel concession U/s 10(5)
ii. HRA U/s 10(13A)
iii. Allowance U/s 10 (14) incl. Food vouchers of Rs 50/meal, except those prescribed below
a) Transport Allowance granted to a divyang employee to meet expenditure for the purpose of commuting between place of residence & place of duty
b) Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office
c) Any Allowance granted to meet the cost of travel on tour or on transfer
d) Daily Allowance to meet ordinary daily charges incurred by an employee due to absence from his normal place of duty.
iv. Allowances to MPs/MLAs U/s 10(17)
v. Standard deduction, deduction for entertainment allowance & employment / PT as contained in S.16
vi. Deduction from family pension U/s 57(iia)
Assessees having Income from Business or profession
vii. Exemption for SEZ unit U/s 10AA
viii. Additional deprecation U/s 32(1)(iia) (& normal depreciation in the manner prescribed)
ix. Deduction on Capital expenditure for specified business U/s 35AD
x. Various deduction for donation or expenditure on scientific research as per S. 35
xi. Deductions U/s 32AD, 33AB, 33ABA & 35CCC.
All assessees
xii. Allowance (Rs. 1500/- per Child for Max 2 children) for income of minor U/s 10(32)
xiii. Interest U/s 24(b) iro SOP or vacant property upto Rs. 2 L (however interest paid on LOP can be claimed against rental income
but excess loss i.e over & above rental income cannot be allowed to be set off under any other head but would be allowed to be C/F)
xiv. Deduction under chapter VIA (like S.80C, 80CCA, 80CCB, 80CCC, 80CCF, 80D, 80E, 80EE, 80EEA,80EEB, 80G,
80GG, 80GGA, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA) Except NPS U/s. 80CCD(2), 30% of New Employee salary
U/s.80JJAA, Amount paid or deposited in the Agniveer Corpus Fund u/s 80CCH(2).
xv. Set off any brought forward losses & unabsorbed depreciation of past years if the same is attributable to any
deduction specified above.
xvi. set off loss from house property with any other head of income.
xvii. Credit of AMT brought forward not to be carried forward.

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Annexure 2- Period of Holding and Tax rates

Effective for assets sold after 23rd July 2024
Assets - Other Than Listed Securities
STCG POH LTCG
PRE POST PRE POST
Real Estate
(Physical)
Stocks (Unlisted) 20%
24 months 12.50%
Foreign Slab rate With indexation
equities/debt
Physical Gold
(Pre POH 36 M)
Bonds (Unlisted) NA Slab rate

Listed Securities
STCG Holding Period LTCG
PRE POST PRE POST
Stocks / Equity MF 12 months 10%$
15% 20%
REITs/InVITs 12 months*
(Pre POH 36 M)

Equity FoFs * N/A

Slab rate
Gold Silver ETF Slab rate 20% 12 months
(Pre POH NA as rate was same 12.50%
for STCG & LTCG)

Bonds (Listed) Slab rate 20% 12 months 10%$

Overseas FoFs 12 months
Slab rate (Pre POH NA as rate was same Slab rate
Gold Funds for STCG & LTCG)

Debt & non-Equity MF’s N/A Slab rate

*Other than those investing 90% in Equity ETFs

$ IF STT is paid

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Grandfathering provision U/s.55 introduced in FA 2018 to continue

Further, following grandfathering provision introduced in Finance Act 2018 U/s.55 will continue -
Cost of acquisition wrt STT paid equity shares, units of equity-oriented fund & business trust acquired
before 1st Feb 2018, shall be deemed to be the higher of –
c) Actual cost of acquisition of such asset
d) And lower of
i. FMV of such asset as on 31st Jan 2018 and
ii. Consideration received or accruing.

Particulars Date Case 1 Case 2 Case 3 Case 4

Purchase Price (Original price) a Jan 1 2017 100 100 100 100
Cut Off Price (Jan 31st 2018 bi Jan 31 2018 200 200 50 200
Price)
Selling Price b ii Actual Sale 250 150 150 50
date
Lower of b i & b ii b 200 150 50 50
Higher of a & b C - Cost of acquisition 200 150 100 100
LTCG Per Share B ii – c SP less Cost 50 0 50 -50

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